Archive for the ‘law’ Category

When the economy (and financial markets) are at it’s extremes, either doing extremely well or extremely poorly, dangerous financial products and ideas become more prevalent. And right now we are seeing an increase in Offering Memorandum products.

Portus, Eron Mortgage Corp, Shire International Real Estate Investments, and Arbour Energy and just a few Canadian examples. The one common denominator they share, is they all are catagorized as Exempt Market Securities.

What are Exempt Market Securities?

…when companies (issuers) sell securities such as stocks, options, or bonds, they are generally required to file a prospectus. This document contains material facts about both the issuer and the security. However, in certain cases securities can be sold without a prospectus and these investments are called exempt securities; the sale is called an exempt distribution or a private placement.

What should I know about Exempt Market Securities?

These investments are not for everyone. A prospectus is meant to ensure an investor has key facts to be able to make an informed decision. Without it, you may be taking a greater risk with your money. Be aware that:

-If you buy an exempt security, you may not have the same legal rights as you do under a prospectus.

-Most exempt securities are subject to resale restrictions. This means you may not be able to sell them for a certain period of time.

-Even if no resale restrictions apply, there might not be a market for the securities you purchased, either because you would not be able to find any purchasers or they may not qualify to purchase the securities.

-Some exempt securities are not liquid. Liquidity means that you can sell an investment in a short period of time and turn it into cash. Some exempt securities, such as hedge funds, may require longer periods to redeem.

-Because these investments are bought without a prospectus, there may be very limited information available on which to base your investment decision.

-When an issuer sells its exempt securities, it may not use a registered dealer as an agent. This means, when you buy from an issuer, you may not get the same protection you would get when you buy from a registered dealer.

–from a release by the Nova Scotia Securities Commission and cirrulated by the other regulators. (footnote 1)

A disclosure document put out by the BCSC includes this simple explanation (footnote 2):

They are called exempt market securities because two parts of securities law do not apply to them. If an issuer wants to sell exempt market securities to you:

-The issuer does not have to give you a prospectus (a document that describes the investment in detail and gives you some legal protections), and
-The securities do not have to be sold by an investment dealer registered with a securities regulatory authority.
There are restrictions on your ability to resell exempt market securities.Exempt market securities are more risky than other securities.

Disclosure documents (be it a Prospectus, when regulated by the Securities Act, or a Policy Contract/Information Folder, when regulated by the Insurance Act), exist for a reason, To protect the investing public. There is no evidence proving the absentence of disclosure documents increases potential return, but it is well known to increase risk.

Policy Contracts and Prospectuses are the financial world’s equivalent to seat belts. Hopefully you won’t have to depend on them in a life or death situation. The best option for most regular folks is to just avoid these dangerous investments. Just like it always advisable to wear your seat belt.

Vancouver, BC – BC Notaries support the Province of B.C.’s proclamation declaring April 6 to 12, 2015 “Make a Will Week” to encourage residents who don’t have a Will to create one to ensure their final wishes are clear and carried out after their death.

A survey conducted province-wide just a year ago by Mustel Group for The Society of Notaries Public of BC found that only 55% of British Columbian adults have a current and legal Will, and people under 54 are the least likely to have one. The March 2014 omnibus telephone poll[1] of 502 adults in BC found that 20% of people in the 18-to-34 age range, 51% between 35 and 54, and 83% of individuals 55+ have a Will in place.

BC Notaries shared five reasons people under 50 should create a legal Will.

1. Do you have dependant children?

A Will enables you to designate who would care for your dependent children if you die This is particularly important for single parents or blended families where the law may not align with your wishes. If you don’t designate custody, the decision may be made by a stranger through the court system

2. Are you a homeowner?

If you share ownership of your home with a partner or others, it’s important to understand how you own property. There are various ways shared ownership can be structured, and that structure impacts what happens to the ownership of your home if you die. Your local notary can do a title search for you and discuss the various options available to ensure your wishes are possible, and your Will is clear.

3. Are you separated, divorced or living in a common-law relationship?

Creating a Will, and ensuring all your documents are up-to-date is very important for the many people whose relationship status has changed. This will ensure that your assets are divided or assigned as you currently wish them to be.

4. Do you have pets?

For many British Columbians, pets are family. Many people want to ensure their pets will continue to be cared for as they as they are now, even or especially if something were to happen to them. A Will came designate those provisions.

5. Peace of mind

Life is stressful enough. Creating a Will gives you and your family peace of mind that those your assets will go to those you love, and your wishes will be followed. For most people creating a Will takes only one or two or three short visits with your Notary, and gives you confidence in your and your family’s future.